1. This appeal by the assessee relates to the assessment year 1977-78.
To appreciate the contentions, it is necessary to set out in some detail the background of the case.
2. There was a HUF of which one Jookanti Viswanadham was the karta. The other coparcener was his son J. Ramulu and the members were Viswanadham's wife Rajeswaramma and Ramulu's wife Vijayalakshmi, and also his minor daughters Manjula and Savita. Viswanadham passed away on 20-5-1975. One of the businesses of the HUF was a business in oil and another was lorry business. The HUF also had agricultural property.
Before the ITO, for the assessment year 1977-78, a return of income was filed on 30-7-1977 showing total income of Rs. 1,645. This was stated to be income from oil business of what was described as the smaller HUF of Ramulu, his wife and two daughters. On the same date, another return was filed showing a loss of Rs. 20,627 being loss from the lorry business. This return was filed showing the status as that of larger HUF of which the members were Ramulu and his mother. In respect of the return filed in the status of larger HUF showing loss of Rs. 20,627, an assessment was made accepting the loss in round figures at Rs. 20,630 on 14-9-1978 under Section 143(1) under GI No. 760-V.3. A claim that there was a partition in the HUF with effect from 5-11-1975 was put forward by Ramulu and his mother. This was considered by the ITO in connection with the return submitted by the smaller HUF and eventually after obtaining replies to questionnaires, etc., the ITO passed an assessment order on 28-3-1980 under GI No. 252-R. In this assessment, he computed the total income at Rs. 15,000 against Rs. 1,650 returned for the oil business. He stated that there was no question of accepting any partition between a mother and son and in the circumstances, the claim could not be entertained.
4. The assessee appealed to the AAC and contended that the claim for partition should have been accepted and the assessment as made was, therefore, not in order. The AAC referred to the background to which we have adverted, broadly, and he passed an order, the operative portion of which reads as under : I have carefully considered the submissions of the learned counsel.
The note of the learned counsel puts forth rather views which are not necessarily accepted by courts. No doubt, there was considerable controversy about the place of woman under Hindu law in view of various enactments like Hindu Womens' Right to Property Act, Hindu Succession Act, etc. In my considered opinion, on the facts and in the circumstances of the case of the appellant, the ITO rightly declined to recognise the alleged partition. Partition presupposes the existence of at least two coparceners. It is not denied in this case that there was no other coparcener than Sri Jookanti Ramulu.
His mother cannot be a coparcener though she comes to be vested with some rights which make her almost a coparcener. The Hindu Succession Act presumably entitles the appellant's mother to a share in her husband's interest in the HUF property. But such interest comes to be determined by operation of law. At best, she could have entitlement to only 1/5th share in business assets. But this is sidetracking the issue on hand. The issue on hand is whether there could be partition between the son and the mother. In my considered opinion, there could be no such partition. Appeal fails.
5. The assessee is in appeal before us and it was contended that the ITO erred in not accepting the partition and, therefore, the assessment as made is not in order. We have heard the learned counsel for the assessee at length and the learned departmental representative. The learned departmental representative submitted that what has to be seen is whether there was a partition or not as claimed, and if there was no partition, the appeals deserves to be dismissed.
6. We have considered the rival submissions. The ITO has passed only a single order under Section 143(3) of the Income-tax Act, 1961. He has mentioned therein, no doubt, that the claim for partition between Ramulu and his mother could not be accepted and then proceeded to determine the income from the oil business. What is before us is, therefore, the assessment order which also deals with the aspect relating to claim of partition. When the assessee claims that the partition should have been accepted, it is equally necessary when dealing with the aforesaid order to determine whether the assessment is made in a proper manner or whether there has been any confusion in this regard.
7. We have already mentioned that Viswanadham passed away on 20-5-1975.
We now have the decision of the Supreme Court in Gurupad Khandappa Magdum v. Hirabai Khandappa Magdum  129 ITR 440 which deals with the relevant provisions of the Hindu Succession Act. Section 6 of the aforesaid Act deals with the devolution of interest which a male Hindu has in a Mitakshari coparcenary property. There is a proviso to Section 6 which becomes applicable since there was a widow and interest of the deceased in the coparcenary property has to devolve according to the proviso. In this case, the devolution will be on the basis of intestate succession and not by survivorship. We have to assume, as pointed out by the Supreme Court, having regard to the provisions of Sections 8, 9 and 10 of the Hindu Succession Act and the relevant Rules, that there was notional partition immediately prior to the death of the deceased.
In the case before the Supreme Court, it was held that having regard to the observations in Mulla's Hindu Law, 14th Edition, at page 403 (para 315) that the notional partition would be between the deceased and his son and the wife who were left behind. However, this is the position all over India excepting in South India as pointed out in para 315 of Mulla's Commentary to which the Supreme Court has referred, since the practice of allotting shares on partition to wives in the South has become obsolete except where the personal law by custom so provided in respect of persons who had migrated from North. Therefore, the notional partition in the present case would have to be assumed to be between Viswanadham and Ramulu. Rajeswaramma would not be entitled to any share on that notional partition.
8. Thus, the position would be that Sri Ramulu would have a half share in respect of the coparcenary property of Viswanadham. In respect of this half share his status as already stated would be that of a HUF consisting of himself, his wife and children. Therefore, in the assessment of the smaller HUF, the half share of income from all the businesses left behind by Viswanadham as also agricultural income would have to be taken into consideration. The assessment of the smaller HUF as made including the entire income from oil business alone is, therefore, not correct. In the interests of justice, it is necessary to set right the mistake and direct a proper assessment to be made. The fact that the assessee had based the claim for assessment on a partition cannot detract from this. The so-called partition has no effect, but the fact remains that the income can be assessed only on the basis of devolution of assets on the demise of Viswanadham.
Therefore, we would set aside the present assessment as made and direct that half the income from the entire businesses and agricultural assets left by Viswanadham which belonged to the HUF of which he was the karta, would be assessable in the case of the assessee-smaller HUF of Ramulu, his wife and children. As far as the other half of income is concerned, Section 19 of the Hindu Succession Act clearly provides that the parties, i.e., Ramulu and his mother Rajeswaramma, take the property as tenants-in-common and not as joint tenants. Therefore, one-fourth of the total share (i.e., one-half of one-half) relates to Ramulu and one-fourth (i.e., one-half of one-half) would relate to Rajeswaramma separately, since these parties do not take by survivorship but take on the basis of intestate succession in view of the proviso to Section 6 of the Hindu Succession Act. We would, therefore, set aside the orders of the authorities below and direct a fresh assessment to be made in the case of the smaller HUF which is the appellant before us, in accordance with our directions. In so doing, the ITO will have regard to the provisions of Hindu Law insofar as the status in respect of the 1/4th share falling to Ramulu is concerned and would consider whether the same has to be included in the hands of the assessee-smaller HUF or is to be considered separately in the hands of Ramulu.